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Facts
The assessee did not file an original return of income. A notice under Section 148A(b) was issued on 23.03.2022, granting a period of less than 7 days for compliance, which is less than the statutory minimum of seven days. The Assessing Officer added Rs. 42,16,650 as income due to the failure to provide evidence for the cost of improvements claimed.
Held
The Tribunal held that the AO had failed to follow the proper procedure for reopening the case by not granting the minimum statutory time as per Section 148A(b) of the Act. Respectfully following the jurisdictional High Court's judgment, the grounds raised by the assessee were allowed.
Key Issues
Whether the reopening of assessment was valid when the assessee was not granted the minimum statutory notice period under Section 148A(b) of the Income Tax Act, 1961.
Sections Cited
148A(b), 148, 149
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. SOUNDARARAJAN K
This is an appeal filed by the assessee against Order passed by the CIT(A) vide DIN and Order No.ITBA/NFAC/S/250/2024-25/1071491640(1) dated 23.12.2024, on the following grounds of appeal :
1. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) [in short "CIT(A)"] erred in holding that the Appellant-Assessee was not willing to pursue the appeal as she had chosen not to respond for hearing notices.
2. On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate the fact that the Assessing Officer while issuing the notice under Section 148 A (b) of the Income Tax Act, 1961 [in short "the Page 2 of 5 Act"] had provided time of less than 7 days which was against the aforesaid Section.
3. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the disallowance of claim for deduction on account of cost of improvement amounting to Rs. 42,16,650.
4. On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate that the income escaping assessment for the assessment year under dispute was below Rs. 50,00,000/- and therefore the CIT(A) ought to have held that the income escaping assessment was below Rs. 50,00,000/- and was time barred as stipulated under Section 149 of the Act.
5. For these and such other grounds that may be urged at the time of hearing the Appellant-Assessee prays that the above appeal may please be allowed.
Briefly stated the facts of the case are that the assessee’s case was selected or scrutiny to examine the following :
1. 1. The assessee has made cash deposit of Rs. 38,24,900/- in Karnataka Bank Ltd. and Rs. 25,39,720/- in Andhra Bank.
2. The assessee has sold immovable property amounting to Rs. 67,28,000/-.
3. Interest other than interest on Securities (194A) amounting to Rs. 1,534/-.
From the records, it was noticed that the assessee did not file its original return of income and the assessee has sufficient transaction s in her bank accounts. Therefore, a notice under section 148 of the Act was issued to the assessee on 31.03.2022. In response to the notice, assessee filed reply on 19.10.2022 declaring income of Rs.5,92,940/-. Thereafter, other statutory notices were issued to the assessee. On 11.01.2023, assessee furnished her reply regarding deposit of cash in the Karnataka Bank Ltd., and Andhra Bank Ltd., amounting to Rs.38,24,900/- and Rs.25,39,720/- respectively which were accepted. From the computation of capital gain, it was observed that the assessee has deducted Rs.42,16,650/- as cost of improvement for computing capital gains / losses. However, the assessee could not
Aggrieved from the above Order, assessee filed appeal beforethe CIT(A). The CIT(A) dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal and challenged the AO’s Order stating that AO has not followed the proper procedure for reopening the case and minimum statutory time as per section 148A(b) of the Act has not been granted to the assessee for compliance. Therefore, as per the judicial precedence, reopening is not justified. In this regard, the learned Counsel drew our attention to page No.15 of the Paper Book regarding notice issued under section 148A(b) of the Act, dated 20.03.2022 and time was granted upto 07.03.202 and he referred to section and as per section 148A(b) of the Act, statutory time limit is minimum 7 days to be granted to the assessee and in support of his arguments, learned Counsel relied on the judgment of the Hon’ble High court and other judgments, paper book comprises of pages 1 to 52. The case laws relied on are as under:
High Court of Karnataka in W.P. No: 8273 of 2025, (T-IT) in Doddagarudanahalli Vyavasaya Seva Bank Niyamitha V/s. Income Tax Officer, (174 taxmann.com 864) dt. 03.04.2025 Hon'ble High Court of Bombay in WP No. 15268 of 2023 in Mukesh J. Ruparel V/s. Income Tax Officer,(153taxmann.com70) dt. 25.07.2023. Hon'ble High Court of Karnataka in WP. No.: 16321 of 2024 (T-IT) in Shaffik Khan V/s. Income Tax Officer, dt. 21.08.2024. Hon'ble Income Tax Appellate Tribunal 'Bengaluru Bench' in ITA No.: 1920/Bang/2024 in E. Ashwath Narayan V/s. Income Yax Officer, Ward No. - 5(3)(1), Bengaluru. Dt. 17.04.2025.
Page 4 of 5 Hon'ble Income Tax Appellate Tribunal in 'Bengaluru Bench' in ITA No.: 2071/Bang/2024 in Vividhodhesha Prathamika Gramina Krushi Sahakara Sangha Ni Gejjalagere V/s. Income Tax Officer, Ward - 1, TPS. Dt. 21.04.2025.
On the other hand, the learned DR relied on the order of lower authorities and submitted that the AO has followed proper procedures and has obtained proper approval from the specified authorities. The maximum time limit to be granted to the assessee is 30 days but there is no liit fir minimum time. In the notice issued under section 148A(b) of the AO, there is reference number quoted as per point No.4 as under:
“4. This notice is being issued after obtaining approval of the PCIT KARNATAKA & GOA accorded on date 22/03/2022 vide reference No. 10000029669480.
He has filed a note wherein he has relied on the judgment in the case of Estate of Late RangalalJajodia Vs. CIT, Madras (1971) 79 ITR 505 (SC).
Considering the rival submissions, we noted that the AO has issued notice under section 148A(b) of the Act on 23.03.2022 with DIN No.ITBA/AST/F/148A/(SCN)/2021-22/1041357236(1) and time was granted upto 27.03.2022 which is less than 7 days but less than the minimum statutory period granted as per section of 18A(b) of the Act. For the sake of convenience, we are reproducing section 148A(b) of the Act:
“(b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted if any, as per clause (a);”
The judgment relied on by the learned Counsel is very much applicable to the present facts of the case. Therefore, respectfully following the judgment of the jurisdictional Hon’ble High Court, we allow the grounds raised by the assessee.
In the result, appeal of the assesseeis allowed.
Pronounced in the court on the date mentioned on the caption page.